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Leases | 9 Months Ended
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Mar. 29, 2020
Leases [Abstract] |
Leases | 4. Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). UNIFI adopted the new lease guidance utilizing the modified retrospective transition method, applied at the date of adoption, recording existing leases as of the effective date, July 1, 2019. Under this method, no adjustment to comparative prior periods is required and, accordingly, financial statement information and disclosures required under Topic 842 will not be provided for dates and periods prior to July 1, 2019. UNIFI made no adjustment to the July 1, 2019 opening retained earnings balance for fiscal 2020. UNIFI adopted the following practical expedients and elected the following accounting policies related to this standard update:
| • | carry forward of historical lease classifications and accounting treatment for existing land easements;
| • | not to reassess whether any expired or existing contracts are or contain leases;
| • | not to reassess initial direct costs for any existing leases;
| • | the use of hindsight;
| • | short-term lease accounting policy election allowing lessees to not recognize right-of-use assets and liabilities for leases with a term of 12 months or less and to recognize lease payments on a straight-line basis over the lease term and variable payments in the period the obligation is incurred; and
| • | the option not to separate lease and non-lease components for the transportation equipment asset class.
UNIFI routinely leases sales and administrative office space, warehousing and distribution centers, manufacturing space, transportation equipment, manufacturing equipment, and other information technology and office equipment from third parties. The lease terms range from 1 to 15 years with various options for renewal. There are no residual value guarantees, restrictions, covenants or sub-leases related to these leases. Variable lease payments are determined as the amounts included in the lease payment that are based on the change in index or usage. The adoption of this standard resulted in the recognition of operating lease right-of-use assets of $9,802 and corresponding lease liabilities of $10,105 with the difference adjusting prepayments and accruals on the consolidated balance sheet as of July 1, 2019. UNIFI’s accounting for finance leases remained substantially unchanged. The standard did not materially impact operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included below. The following table sets forth the balance sheet location and values of the Company’s lease assets and lease liabilities at March 29, 2020:
Classification |  | Balance Sheet Location |  | March 29, 2020 |
Lease Assets |  |  |  |  |  |
Operating lease assets |  | Operating lease assets |  | $ | 6,084 |
Finance lease assets |  | Property, plant & equipment, net |  |  | 23,257 |
Total lease assets |  |  |  | $ | 29,341 |
Lease Liabilities |  |  |  |  |  |
Current operating lease liabilities |  | Current operating lease liabilities |  | $ | 1,709 |
Current finance lease liabilities |  | Current portion of long-term debt |  |  | 4,112 |
Total current lease liabilities |  |  |  | $ | 5,821 |
Non-current operating lease liabilities |  | Non-current operating lease liabilities |  | $ | 4,481 |
Non-current finance lease liabilities |  | Long-term debt |  |  | 8,699 |
Total non-current lease liabilities |  |  |  | $ | 13,180 |
Total lease liabilities |  |  |  | $ | 19,001 |
The following table sets forth the components of UNIFI’s total lease cost for the three months and nine months ended March 29, 2020:
|  | For the Three |  |  | For the Nine |
|  | Months Ended |  |  | Months Ended |
Lease Cost |  | March 29, 2020 |  |  | March 29, 2020 |
Operating lease cost |  | $ | 507 |  |  | $ | 2,104 |
Variable lease cost |  |  | 158 |  |  |  | 355 |
Finance lease cost: |  |  |  |  |  |  |  |
Amortization of lease assets |  |  | 669 |  |  |  | 1,874 |
Interest on lease liabilities |  |  | 126 |  |  |  | 327 |
Short-term lease cost |  |  | 316 |  |  |  | 863 |
Total lease cost |  | $ | 1,776 |  |  | $ | 5,523 |
The following table presents supplemental information related to leases at March 29, 2020:
|  | For the Nine |
|  | Months Ended |
Other Information |  | March 29, 2020 |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating cash flows used by operating leases |  | $ | 2,104 |
Financing cash flows used by finance leases |  | $ | 4,606 |
Non-cash activities: |  |  |  |
Leased assets obtained in exchange for new operating lease liabilities |  | $ | 175 |
Leased assets obtained in exchange for new finance lease liabilities |  | $ | 6,301 |
UNIFI calculates its operating lease liabilities and finance lease liabilities entered into after the adoption of the new lease standard based upon UNIFI’s incremental borrowing rate (the “IBR”). When determining the IBR, we consider our centralized treasury function and our current credit profile. We then make adjustments to this rate for securitization, the length of the lease term, and leases denominated in foreign currencies. Generally, the IBR for each jurisdiction is the specific risk-free rate for the respective jurisdiction incremented for UNIFI’s corporate credit risk. The following table sets forth UNIFI's weighted average remaining lease term in years and discount rate percentage used in the calculation of its outstanding lease liabilities as of March 29, 2020:
Weighted Average Remaining Lease Term and Discount Rate |  | March 29, 2020 |
Weighted average remaining lease term (years): |  |  |  |
Operating leases |  |  | 4.2 |
Finance leases |  |  | 4.2 |
Weighted average discount rate (percentage): |  |  |  |
Operating leases |  |  | 3.8 | %
Finance leases |  |  | 3.6 | %
Lease Maturity Analysis Future minimum finance lease payments and future minimum payments under non-cancelable operating leases with initial lease terms in excess of one year under Topic 842 as of March 29, 2020 by fiscal year were:
Maturity of Lease Liabilities |  | Finance Leases |  |  | Operating Leases |
Fiscal 2020 |  | $ | 1,560 |  |  | $ | 495 |
Fiscal 2021 |  |  | 3,989 |  |  |  | 1,870 |
Fiscal 2022 |  |  | 3,684 |  |  |  | 1,425 |
Fiscal 2023 |  |  | 1,260 |  |  |  | 1,231 |
Fiscal 2024 |  |  | 1,307 |  |  |  | 1,086 |
Fiscal years thereafter |  |  | 2,625 |  |  |  | 628 |
Total minimum lease payments |  | $ | 14,425 |  |  | $ | 6,735 |
Less estimated executory costs |  |  | (588 | ) |  |  | — |
Less imputed interest |  |  | (1,026 | ) |  |  | (545 | )
Present value of net minimum lease payments |  |  | 12,811 |  |  |  | 6,190 |
Less current portion of lease obligations |  |  | (4,112 | ) |  |  | (1,709 | )
Long-term portion of lease obligations |  | $ | 8,699 |  |  | $ | 4,481 |
Prior Year Disclosure As reported in the 2019 Form 10-K under the previous accounting guidance, future minimum capital lease payments and future minimum lease payments under non-cancelable operating leases with initial lease terms in excess of one year as of June 30, 2019 by fiscal year were:
|  | Capital Leases |  |  | Operating Leases |
Fiscal 2020 |  | $ | 5,917 |  |  | $ | 3,164 |
Fiscal 2021 |  |  | 2,870 |  |  |  | 2,731 |
Fiscal 2022 |  |  | 2,565 |  |  |  | 1,492 |
Fiscal 2023 |  |  | 189 |  |  |  | 878 |
Fiscal 2024 |  |  | 189 |  |  |  | 755 |
Fiscal years thereafter |  |  | 675 |  |  |  | 309 |
Total minimum lease payments |  | $ | 12,405 |  |  | $ | 9,329 |
Less estimated executory costs |  |  | (644 | ) |  |  |  |
Less interest |  |  | (643 | ) |  |  |  |
Present value of net minimum capital lease payments |  |  | 11,118 |  |  |  |  |
Less current portion of capital lease obligations |  |  | (5,519 | ) |  |  |  |
Long-term portion of capital lease obligations |  | $ | 5,599 |  |  |  |  |
Rental expenses incurred under the operating leases and included in operating income consist of the following:
|  | For the Fiscal Year Ended |
|  | June 30, 2019 |  |  | June 24, 2018 |  |  | June 25, 2017 |
Rental expenses |  | $ | 4,915 |  |  | $ | 4,835 |  |  | $ | 4,357 |

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- Definition The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing. + References Reference 1: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 + Details
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